Presentation by Esther Luiten from the Sustainable Trade Intiative presented at the Seafood Summit 2012, 7 September, 2012.

1. Bankability
of
aquaculture
–
Insights
from
other
commodi9es
Esther
Luiten
Senior
Program
Manager
Aquaculture

2. Insights on
bankability of small
holders:
1) Value chain needs to be
streamlined
2) Farmers need to save
3) Certified farmers control
risks better

3. Business has great leverage
Top
200
mul*na*onals
15
key
commodi*es
35
most
threatened
regions

4. An emerging business case
v

5. IDH in a glance
Profile
• Accelerating + up-scaling sustainable trade
Founded in 2008
• Convening impact oriented coalitions
• Co-funding private investments to achieve Investment
package
sustainable production Euro 600 M for
• Stimulate private sector development 2011-2015
• Impact on MDG1, MDG 7 and MDG 8 12-16 commodity
programs
International
coalition:
Reaching ‘tipping point’ - 70 companies,
- 10 NGOs
Scaling impact
Endorsed by Dutch
Accelerating (and other)
governments
35 staff members

6. IDH in a glance
Profile
• Accelerating + up-scaling sustainable trade
Founded in 2008
• Convening impact oriented coalitions
• Co-funding private investments to achieve Investment
package
sustainable production Euro 600 M for
• Stimulate private sector development 2011-2015
• Impact on MDG1, MDG 7 and MDG 8 12-16 commodity
programs
International
Public Co- Impact Commercial coalition:
grants funding investing finance - 70 companies,
Reaching ‘tipping point’
- 10 NGOs
Scaling impact
Endorsed by Dutch
Accelerating (and other)
governments
35 staff members

7. Bankability of commodities
Bankability = the ability to pay back = the ability to meet the
organizational objectives
Ecological Social Business performance
• ↓ use of agro- • Contracts with workers • Quality mngt
chemicals • Community relations • Health mngt
• Control use of feed • Insurances • Monitoring of farming
• Nature and bio- • etc. • Farming protocols
diversity conservation • ↑ Supply chain links
• ↑ Productivity • Traceability
• etc. • Market positioning
• etc.
Certification = more robust management = increased ability to
meet organizational objectives (less risks, less costs, higher
profitability)

8. Finance and aquaculture
“Cautious due to past experiences”
• Country risks
Difficult for (foreign) lenders to register collateral
Macro economy: fast growth and high trade deficit lead to growing inflation
• Market risks aquaculture
Price volatility: raw material and farm-gate prices
Increased international competition
Difficult to differentiate through quality
• Farming risks
Diseases
Production failures
Environmental and social risks
• Financial and currency risks
Informal financing (small holders shrimps)
High interest rates (for farmers)

9. Finance and cocoa

10. Finance and cocoa
• Economic growth
• Employment
• External balance
• Secure long
term supply
• Fertilizer
business
opportunity
• Profitability
• Community
welfare
• Food security
• Environmental preservation
• Reduce pressure on land clearing

11. Finance and cocoa
1. Farm finance: The farmer group takes a bank loan for fertilizer for its
members, with risk-sharing from the other supply chain agents
2. Fertilizers-for-beans: The cocoa supplier is partially paid in fertilizer
upon delivery of beans to the trader
3. Cash-and-carry: Building
on the supply chain
infrastructure, fertilizer is
made available at selling
points close to farmers to
buy in cash
Need for innovative
financing models:
• Robust
• Efficient
• Outreach

12. Finance and aquaculture
Average annual growth in global per capita food consumption, 2012-2021:
Source: OECD-FAO Agricultural Outlook 2012-2021, 2012

13. Finance and aquaculture
Feed Seed
FI Policy &
regulation
Farming
Middle-
men
Middle-
men
Need for innovative
financing models: Proces-
• Robust sor
• Efficient
• Outreach

14. Finance and aquaculture: de-risking
• Savings
• Organising capacity building & training
On farm • Aggregation
• Certification as risk-mitigator?
Finance
• Risk assessment profiles in aquaculture
inclusive supply • Risk-sharing arrangements (supply chain)
chain • Professionalization of suppliers and chain
management
partnerships
• Support farmer aggregation
Government & • Clarity on land-titles
Investors •
•
Patient money for investments in capacity building
Diseases: monitoring & control

15. Insights on
bankability of small
holders:
1) Value chain needs to be
streamlined
2) Farmers need to save
3) Certified farmers control
risks better

16. Key messages:
1) Value chain commitments
increase access to finance
2) Certification is a tool:
‘aggregating receptive
farmers’ + streamlining
value chain + risk-tool